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Google Payments the Movie: A Tale of the Incredible Shrinking Wallet

Posted on Mar 27, 2013

By: Leilani Doyle

Commentary on: "The Incredible Shrinking Google Wallet" by Karen Webster

You would think that Google’s free cash flow, which was set at about $3.7 billion for Q4 2012, combined with great brand recognition, would pave the way as a serious leader in the move to next generation retail payments.  But alas, what was launched as the “PayPal killer” in 2006 and later retooled as Google Wallet in 2011 has failed to make a dent in the prime time box office of retail payments. News of Google’s Commerce reorg announced earlier this month seems to be a clear signal that Google is rethinking its plot line yet again, in order to gain greater audience appeal.

A key fact in Google’s lackluster box office results is that Google Wallet played only in limited theaters. Karen points out that a Google Wallet user had to purchase an NFC capable phone, live in an area with reasonable NFC density, such as Manhattan and have a Citi Mastercard. In the end, all these barriers just didn’t make Google Wallet any simpler. The complete article highlights the various plot twists that further complicated the Google Payments story line, including how VISA cards were processed behind MasterCard’s front-end and how merchants weren’t all that crazy about giving up access to all that juicy information regarding customers buying habits.  There were even rumors of a plastic Google card, which seems to defeat the whole vision of revolutionizing retail payments. I mean a card is blatantly admitting to an “if you can’t beat ‘em, join ‘em” strategy. 

I do agree with Karen that what Google really needs to do to be successful is to focus on a very specific use case, one that is unique to Google, and build from there. Apple may very well be adopting this strategy, with its low-key approach to Passbook. Inevitably, payments are on the verge of a major transformation. However, it is likely to be a transformation that creeps up on us slowly and then suddenly swells to engulf the $60 billion retail payments market. A colleague recently made the analogy that creating the next generation payments network is like staring too long into the sun. I guess Google is taking a timeout to find a new pair of shades.